In an instant message chat on March 16, 2012, Co- conspirator-1 warned Grout not to “better” efforts to disguise a loss to superiors, according to the indictment. He added, referring to Martin-Artajo, “I don’t know where he wants to stop, but it’s getting idiotic.”
In August, Bharara said the co-conspirator who exchanged that and other messages with Grout was Iksil. Iksil was also directed by Martin-Artajo to mismark books, Bharara said then.
Mismarkings of the portfolio continued into April 2012, the U.S. said. The two men later caused JPMorgan to make false filings of books and records with the SEC from March to May of 2012, according to the indictment.
Prosecutors seek forfeiture from both Martin-Artajo and Grout for any illegally obtained proceeds they earned in the scheme as well as the salaries JPMorgan paid them during the time they committed the alleged crimes.
Bharara has urged both men to surrender to U.S. authorities to face charges that they hid the bank’s trading losses on derivatives. Lawyers for Grout, who is a French citizen, have said he’s in France.
Martin-Artajo was released from police custody in Spain after telling a Madrid court that he opposed attempts by U.S. prosecutors to extradite him to face prosecution in New York.
The bank’s bad bets on derivatives, placed by Iksil, prompted authorities on two continents to open investigations into the firm’s controls and disclosures last year. The U.S. Securities and Exchange Commission, the Office of the Comptroller of the Currency, the Federal Reserve and the U.K.’s Financial Conduct Authority are among watchdogs planning to sanction the lender, the people said.
JPMorgan may make some admissions while settling with the SEC, such as conceding that it erred in how it oversaw the traders and their unit, a person briefed on those talks said last month. The bank isn’t likely to admit mistakes beyond what it disclosed when releasing the results of an internal review earlier this year, the person said.
Chief Financial Officer Marianne Lake told investors last week that the quarter’s addition to legal reserves would “more than offset” about $1.5 billion of consumer reserve releases.
The case is U.S. v. Martin-Artajo, 13-cr-00707, U.S. District Court, Southern District of New York (Manhattan). The SEC case is Securities and Exchange Commission v. Martin-Artajo, 13-cv-05677, U.S. District Court, Southern District of New York (Manhattan).